Long before the first piece of track was laid, the billion-dollar Green Line linking the downtowns of Minneapolis and St. Paul was envisioned not just as a train ride, but as an engine for growth in the neighborhoods it rumbled through.

And at least $80 million in taxpayer money has been invested over the past eight years to see that it happens.

“It always had to be about the community that you could create along the line,” said St. Paul Mayor Chris Coleman. “In many ways, we have the most planned line in the country, in terms of the surrounding development that would occur.”

Now with the line’s opening just two weeks away, mixed results are raising concerns about whether the public investment will meet the goals of improving the economic bottom line for the cities and the quality of life for residents nearby.

The Metropolitan Council, the regional planning agency that built the line, and local government officials claim that the public spending has stoked $2.5 billion in projects constructed, underway or planned within a half-mile of the 11-mile route that stretches from Union Depot in St. Paul, through the neighborhoods along University Avenue and into downtown Minneapolis.

Yet much of that $2.5 billion includes housing, retail and other projects that likely would have gone up anyway. They include the $243 million publicly funded renovation of Union Depot, the boom in private student housing at the University of Minnesota, Ryan Companies’ $400 million mixed-use project tied to the new Minnesota Vikings stadium and other developments in prime downtown Minneapolis spots where the Blue Line has been operating for 10 years.

JIM GEHRZ &#x2022; jgehrz@startribune.com

A light-rail train approached the Hamline Avenue station on University Avenue in St. Paul during a testing period on the Green Line.

Most of the $80 million or more in public money dedicated to development along the Green Line has been committed to housing, office and retail projects along a critical 7-mile stretch from the eastern edge of Minneapolis to downtown St. Paul.

Yet despite millions spent in an already poor 2-mile strip from Hamline to Western avenues in St. Paul’s Midway district — most of it on low- and moderate-income housing — blocks appear largely unchanged: vacant storefronts and old clapboard houses are scattered among ethnic restaurants and small businesses that survived construction with the help of grants from the city.

“We’re hoping that these affordable housing projects are seeding the market … and hopefully will attract more private investments along the corridor,” St. Paul planning director Donna Drummond said.

Contrasts along the corridor

The progress can be hard to gauge simply by eyeballing the area along the Green Line, also known as the Central Corridor.

Most changes in downtown St. Paul are hidden behind the classical facades of former office buildings that have been converted into mostly market-rate apartments and lofts with the aid of government funds.

An example is the Lofts at Farmers Market, where the Met Council helped fund the development of 58 luxury apartments for rent at market rates. Then there is the new Penfield apartment complex, rescued by the city when the market crashed, which includes a grocery store recently opened by Lunds.

At the other end of town, the area west of Fairview Avenue displays impressive redevelopments such as the C&E Lofts, Habitat for Humanity’s sleek new olive-colored headquarters and Episcopal Homes’ Midway Village senior housing complex, under construction beneath yellow fiberglass sheathing.

The Met Council says it doesn’t track all sources of public spending related to the line. Still, the agency’s available figures illustrate the government’s development priorities.

The affluent neighborhoods along the route, near each city’s downtown, are scoring public funding for mostly market-rate apartments and lofts. The agency gave a developer and Minneapolis $2.7 million to help build 250 apartments — 80 percent at market rates — on the former Boeser manufacturing site in the Prospect Park neighborhood. Nearby, Minneapolis got more than a half-million dollars from the Met Council to help the Surly Brewing Co. build a new brewery.

The central and eastern parts of the Midway district — located in the less dense and lower-income middle stretch of the line — have received the biggest concentration of new government-backed low- and moderate-income housing.

One of the biggest projects set to break ground this year will feature twin four-story buildings at University and Hamline avenues, developed by the nonprofit Project for Pride in Living and a private partner. The complex will offer 108 rental units, all affordable.

The apartments, to be built atop new commercial space on a former car dealership site, are “part of the city’s efforts to remove blighted conditions within the Midway neighborhood,” a Met Council document stated last year.

The $28 million project will rely on about $9 million in government help, including a $3.25 million grant from the Met Council, according to the nonprofit Local Initiatives Support Corp. (LISC).

Met Council and other public grants paid for much of the $13 million Frogtown Square project at University Avenue and Dale Street that features 50 affordable apartments for seniors above restaurants, small stores and a grocery, LISC says. Another $2.6 million in government grants is aimed at the Old Home Dairy building at University and Western avenues, expected to be renovated this summer for commercial space and 60 low- and moderate-income apartments.

The heavy emphasis on subsidized low- and moderate-income housing along University has sparked heated debate.

“They’re going to add more concentrated poverty,” said University of Minnesota law Prof. Myron Orfield, who researches urban development and says “those neighborhoods need middle-class families and consumers.”

St. Paul NAACP President Jeffry Martin is among those who challenge the focus on housing subsidies on parts of University. It’s “just going to lead to more segregation in our communities,” he said. “It’s not something we want to support.”

But Paul Williams, who left his job as St. Paul’s deputy mayor to become executive director of Project for Pride in Living, defends “doing this work in the core city and in our toughest neighborhoods.”

He said the new low- and moderate-income housing is needed to offset higher rents that might result if the Green Line draws more affluent people to the neighborhood.

“Many folks in that neighborhood are concerned about … not being able to stay once the light rail opens,” he said.

Slow to take off

There is little sign of that happening. The share of households with incomes under $30,000 hasn’t changed much in the past four years, according to the Central Corridor Funders Collaborative, a group of foundations formed to help Green Line neighborhoods.

Property values for homeowners near the Green Line actually have fallen in recent years, as they have citywide. And even though rents for two-bedroom apartments in the poorest stretch along University Avenue have risen about the same as in the rest of Minneapolis and St. Paul, analysts “aren’t seeing signs of broad displacement in the corridor,” said Jane Tigan, a Wilder Foundation research associate.

Meanwhile, enticing businesses to build alongside low- and moderate-income housing has been a hard sell. Recently, the Met Council awarded $800,000 to replace the Brownstone building at University Avenue and Victoria Street — which houses a restaurant, the Model Cities social program and a training center for convicts — with a four-story building with retail and offices and 40 low- and moderate- income apartments.

The agency also committed another $1.1 million to build 30 similar apartments nearby to “replace vacant and blighted lots with public space and retail storefronts, greatly increasing light rail’s potential to encourage transit ridership and catalyze future economic development.”

Both projects are stalled. While public funds are available for the housing part, “the commercial side is very hard to get to work. … It keeps coming up short for financing,” said Gretchen Nicholls of LISC.

St. Paul officials point to two pivotal areas that could spur growth in the Midway. Sears is said to be planning a mixed-use development, including 139 housing units, without public subsidy for its store site west of the State Capitol. And St. Paul’s Housing and Redevelopment Authority is seeking proposals to redevelop the Midway Shopping Center site and the Met Council’s adjacent “bus barn” property near University and Snelling avenues.

Coleman, who as a boy saw University Avenue bypassed by Interstate 94 and become a boulevard noted mainly for car dealers and surface lots, agreed that building out that stretch will take time. “You have to be patient,” he said.

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